POH Ratio Explained: Why Park-Owned Homes Break MHP Loans
Why agency lenders cap park-owned-home concentration at 20% — and how to underwrite around it.
What POH Ratio Actually Measures
POH ratio is the percentage of a mobile home park's lots occupied by park-owned homes — homes the park owner has on title and rents out as a complete unit (lot + dwelling). The opposite is TOH (tenant-owned homes), where the park owner rents only the dirt and the resident owns the structure. Most established parks run a mix; the question is the ratio.
A 5%-POH park is essentially pure land — the park owner is in the real-estate business. A 60%-POH park is a hybrid: half real-estate, half rental-housing operator. The economics, the financing, and the risk profile are completely different. Agency lenders treat the threshold as roughly 20% — above that, the deal stops fitting standard MHP programs.
The ratio is calculated as POH lots ÷ total occupied lots. Vacant lots are excluded. Cabins, park models, and RV pads are accounted for separately under most agency programs.
Why Agency Lenders Cap POH at 20%
Park-owned homes are personal property (chattel) in nearly every state, not real estate. They have a separate certificate of title from the land underneath, depreciate on a different schedule, and do not transfer as part of a real-estate deed. From the lender's perspective, that means POH is not part of the collateral package — the lender's mortgage attaches to the land, not the homes sitting on it.
Fannie Mae MHC and Freddie Mac MHC both cap POH concentration at 20% of total occupied sites, and both programs heavily underwrite the income basis: lot-rent-only NOI, with POH revenue stripped out. CMBS conduit programs follow the same logic. The thinking is that a park where 60% of revenue depends on chattel the lender doesn't collateralize is, structurally, a hybrid rental business — and rental businesses get priced like operating businesses, not real estate.
There are exceptions. A handful of regional banks and specialty MHP lenders will go to 30–40% POH at lower leverage. Bridge lenders will go higher still, but at 8–10% rate and a 24-month conversion clock.
How to Underwrite Around a High-POH Park
The standard move on a 30–60% POH park is to re-base the underwriting to a lot-rent-only NOI. Strip out POH rent (replace with whatever lot rent the park charges TOH residents on similar lot types), strip out POH-specific expenses (repairs, maintenance, water heaters, appliance replacement), and re-run the DSCR on the lot-rent-only number. That is the deal as agency sees it.
Then you layer the POH revenue back in as a separate revenue stream — typically valued at a hospitality-style multiple, not a real-estate multiple. POH NOI of $100K at a 12% cap is worth roughly $830K. POH NOI of $100K at a real-estate 7% cap would be $1.4M. The lender values the smaller number, the seller wants you to pay the larger number — that's the negotiation.
The exit play is conversion: sell each POH to its current resident over time, converting to TOH. Done well, this drops POH ratio under 20% within 2–3 years and unlocks agency refinancing. The math only works if the resident base has the down-payment capacity, which most do not without seller-financed conversions.
The Five Numbers to Verify Before You Sign
On any park where POH is more than 15% of revenue, verify five things at LOI stage. First, POH count and titles — confirm each home is actually titled in the seller's name (we have seen "POH" homes whose title traces to the seller's daughter, brother, or LLC). Second, age and condition — POH older than 1976 (pre-HUD code) cannot be financed under most programs even after conversion to TOH. Third, the all-in monthly rent for POH residents vs the lot rent for TOH residents — that gap is the convertible value.
Fourth, expense load on POH specifically — repair history per home, not just total park expense. A park where POH expenses run 35% of POH rent is a different deal than one running 18%. Fifth, conversion history — has the seller actually sold any POH units to residents in the past three years? A seller who has never converted a single home is selling you a story.
Get those five and you can model the deal with eyes open. Skip them and the lender's underwriting will surprise you at week six.
Run a POH-Adjusted DSCR on Your Park →
Upload your park's rent roll. We strip POH revenue, re-base NOI to lot-rent-only, and tell you which agency programs the deal fits — and which require a conversion plan first.
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